In a global context where traditional tobacco sales are steadily falling, the major manufacturers have no other choice but to change their strategy. New products, new image… A deep, long and costly transformation in which Philip Morris International is committed.
IQOS, A RISK REDUCTION PRODUCT?
A few months ago, when André Kalentzopoulos, the CEO of Philip Morris International (PMI) said that the group's goal was to move away from traditional cigarettes. Many believed it was a hoax. How can a multinational, which employs 90.000 people, and has been manufacturing and selling tobacco for 150 years under the Marlboro, Chesterfield, L&M brands, negotiate such a shift? Yet that is what is happening.
After 10 years of work, 3 billions of dollars and 1.900 patents filed, Philip Morris created IQOS, nicknamed by consumers " I quit ordinary smoking". A small tobacco stick made up of a filter is inserted into an electronic device and then heated between 300 and 350 degrees. Tobacco mixed with glycerin vaporizes under the effect of heat. The smoker inhales thus " a tobacco steamer "(And therefore nicotine). Everything, without flame, without combustion, without smoke, without smell and without ash. The electronic device is made in Malaysia. Philip Morris assures that subcontractors have the industrial capacity to support high speeds.
One of the group's communications managers, Tommaso di Giovanni, accompanied by Ruth Dempsey, the emblematic scientific manager of Philip Morris International, are responsible for an hour and a half of explaining how Iqos works (samples, prototypes, scientific studies, negotiations with the authorities). The opportunity also to present the new strategy of the group, " limited risk products". It's still about smoking, but about smoking better.
The tobacco company explains that this “aerosolized tobacco” technique has the potential to considerably reduce health risks. According to studies by the group, Iqos could reduce certain chemical compounds in significant proportions, in the order of 90 to 95%. However, many independent studies are still underway.
PHILIP MORRIS WANTS TO IMPOSE IQOS IN THE WORLD ..
A strategy " low risk »Which allows Philippe Morris to continue selling tobacco, his core business. For example, its Bologna plant in Italy has just undergone a facelift: $ 670 million to transform and adapt production lines. 74 billion tobacco sticks should leave the group's factories by the end of the year.
Iqos is already sold in around 35 countries. In Japan at the national level, and in many cities, in Switzerland, Italy, Russia, Portugal, Germany, the Netherlands and even Canada. The goal is for Iqos to be marketed in XNUMX countries by the end of the year. Including France. But the tobacco company refuses to mention any calendar.
In the United States negotiations are under way with the all-powerful FDA (Food and Drug Administration). Ruth Dempsey the scientific leader, says that " 2 million pages of documentation have already been provided to the authorities". Philip Morris assures us that the conversion rates " traditional smokers towards Iqos Are encouraging (between 69 and 80% depending on the country).
However, it will take time before Iqos and the other electronic models of the group come to surpass in the accounts, the traditional cigarette. In 2016 “fuel products” brought in 74 billion dollars. " Reduced risk products": $ 739 million. " Decades of history don't change in an afternoon "Explained little ago André Kalentzopoulos the CEO of PMI.
The new strategy seems to appeal to investors: Philip Morris International course flames, 85 dollars in January 2017, it reaches a little over 104 dollars these days.
In the laboratories, we are already working on future models, PMI now devotes half of its budget to research and development, 4.500 patents are being registered. The opportunity to transform - from this year - these new generation cigarettes into connected cigarettes (Bluetooth, mobile application).
A future growth driver in power since this could open the door to Big data for Philip Morris. But in response to this question, Tommaso Di Giovanni, the group's spokesperson, will be satisfied with a big smile.
Source : BFM TV
